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According to Buerger (1991), a budget is a formal written statement of a hospital's plan for the future (p. 3). A budget acts as guidance to the hospital in its operations. It also helps in the realization of goals set by the hospital management.
Buerger (1991) observed that the ability of a small hospital to succeed in its operations largely depends on its administration's ability to prepare a successful budget (6). It is therefore very important to involve all the leaders in the development of the budget in order to achieve unbiased budget.
In most cases, small hospitals faces tougher financial constraints compared to other big hospitals. Small hospitals usually make their purchases in small quantities. For instance, they cannot buy large quantities of drugs like in the case of the big hospitals. This denies them the priorities of large scale operations that are enjoyed by their counterparts.
For instance, they purchase their drugs in small quantities which increase their operational costs. They also do not enjoy quantity discounts which are enjoyed by the big hospitals.
An explanation on how a budget is achieved for a small hospital setting
In most cases, small hospitals develop its budget through its various departments. Each department's heads makes their respective department's financial projections (Buerger, 1991, p.3). The departmental heads are responsible for the daily operations of their respective departments. They are obliged to know the average expenses of their departments in execution of their obligations. Therefore it becomes very easy for the hospital's administration to make budget projections through the departmental heads.
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Budgeting process also involves setting future goals which the hospital aims to have achieved after a certain period. In most cases, the budget covers a period of one year after which another budget is projected.
The administration's compiles various projections from the department leaders and then come up with strategies which incorporate the needs of various departments. The administration can also gauge the needs of various departments and give more attention on those areas which needs more attention.However, due to economic pressures, the top administration has come up with measures to maximize returns and minimize costs. For instance, the input price inflation and relative needs of the population has increased the financial needs of a small hospital (Robert, 2004, p.12).This has consequently led to competition of various needs. Some departments end up getting more allocation than others.
Small hospitals usually have three types of budget; statistical budget, expenses budget and the revenue budget. In the expenses budget, the departmental heads gives their projections on the total amount of money they expect to spend in the year. On the other hand, the revenue budget indicates the amount of money which each department expects to generate. Finally, the statistical budget is the measure of the activities which each department expects to be involved in the year.
Is the allotment of money given in a fair manner according to work productivity?
The allocation of the budget is not fare according to the productivity. The administrative personnel allocate the money depending on the needs of each department. It gives the first priorities to the most urgent needs despite the productivity of the respective department
How would you make it work better?
In order to come up with a successful financial budget, it is very important to have a team work in its development (Buerger, 1991, p.3). For this system of financial allocation to work better, the administrators of a small hospital should consider the revenue generation from each department. This method will help in improvement of the services in these departments.
The discussion above has clearly indicated the importance of the budget in a small hospital. It has revealed that the hospital's budget is a very important part of the hospital. The survival of a small hospital is significantly determined by the success of its financial budget. It is therefore very important to use teamwork to come up with a successful unbiased budget.